U.S. West Texas Intermediate and international-benchmark Brent crude oil finished higher for the week, but Brent was the best performer. This is because most of the news continues to center on U.S. production in the wake of the impact of Hurricane Harvey on U.S. refinery output the week before.
U.S. crude oil prices rose and gasoline prices fell at the start of the holiday-shortened week as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude and eased fears of a serious supply crunch.
Late in the week, oil futures traded mixed, with Brent rising to a 5-1/2 month high while U.S. crude slipped on a bigger-than-expected crude stock build as the restart of U.S. refiners after Hurricane Harvey was countered by the threat of Hurricane Irma.
According to the U.S. Energy Information Administration, U.S. weekly crude stocks increased 4.6 million barrels the week-ending September 1, topping analysts’ forecast for a 4.0-million-barrel build in a Reuters poll.
Additionally, in response to the impact of Harvey which hit the Gulf Coast of Texas on August 25, the EIA said U.S. oil refinery utilization rates slumped 16.9 percentage points to 79.7 percent last week, the lowest rate since 2010.
U.S. Gulf Coast utilization rates dropped to 63.4 percent, the lowest rates since the EIA began collecting the data in 2010.
As of September 6, about 3.8 million barrels of daily refining capacity, or 20 percent of the U.S. total, was shut in, though a number of refineries and petroleum-handling ports were restarting.
Finally, energy services firm Baker Hughes reported that U.S. energy firms cut oil rigs for a third time in the past four weeks as the 14-month drilling recovery stalled with energy firms reducing spending plans in response to recent crude price declines.
Drillers cut three oil rigs in the week to September 8, bringing the total down to 756, the least since June.
If last Friday’s sell-off is any indication, crude oil prices are likely to be under pressure this week as investors react to the impact of Hurricane Irma on near-term demand for gasoline and crude oil.
The short-term WTI chart indicates there may be enough downside momentum to challenge a major retracement zone at $46.52 to $45.57